Zimbabwe’s gold export receipts retreated 24% to US$85.8m in August 2020 from US$113m earned during the same period last year due to a huge dip in gold deliveries on payment delays.
The decline in receipts comes as deliveries slipped by more than half to 1.27 tonnes during the month of August 2020 from 2.746 tonnes during the same month in 2019 due to delays in payments by the central bank.
Despite the up to date payments by the Reserve Bank of Zimbabwe, gold miners prefer alternative markets which pay instantly and on the ground.
RBZ governor John Mangudya told Business Times that lockdown restrictions imposed by several countries affected the movement of critical mining raw materials and this has affected both gold deliveries and exports.
“Cumulatively, the country’s bullion export earnings have gone down 4.9% to reach US$641.3m during the first eight months of 2020 from US$674.4m earned during the comparative period in 2019 due to a huge fall in July and August gold deliveries.
“During the first eight months of the year the exported yellow metal was 24.9% down to 11.7 tonnes from 15.5 tonnes shipped during the same period last year,” Mangudya said.
Zimbabwe was on track during the first half of the year when the country’s export earnings for the half year went up 2.6% to US$476.2m from January 2020 to June 2020 from US$464m earned during the same period last year due to the review of foreign currency retention threshold and increased fuel allocations this year.
In January export earnings were US$98m from US$70.4m, while in February export earnings were US$56.1m from US$77.8m.
In March, yellow metal export receipts were US$71.9m up from US$88m in the comparable period last year. In April, gold exports were down to US$63.4m from US$76.4m.
In May, exports were up to US$120m from US$85.8m in the same month last year. During the month of June 2020 gold receipts were US$66.4m from US$65.4m during the same period last year.
In April 2020, gold deliveries were 31% down to 1.46 tonnes in March 2020 from 2.12tonnes in April 2019 due to the Covid-19 pandemic which had already started affecting the countries from which mining chemicals such as cyanide are sourced, impacting on the operations of various mines.
Movement of chemical consignments from the said countries was affected as early as February 2020 with the effect being felt from March.
Zimbabwe’s gold exports were up in January, May and June with the rest of months down during February, March, April and July due to lockdown restrictions which limited artisanal miners to operate.
Government has increased fuel allocations to gold miners from last year but the lockdown and the effects of coronavirus have thwarted miners to get consumables from China.
Experts say gold mining, especially small scale, was affected by the lockdown regulations as social distancing had to be observed.
Gold and tobacco are Zimbabwe’s highest foreign currency earners and account for nearly half of the country’s export earnings.
The yellow metal is now the highest forex earner and contributes 38% of the country’s total earnings and more than 60% to the mining sector which is the highest forex earning sector in the country.
Mines and Mining Development minister Winston Chitando said the Covid-19 pandemic has affected the operations and a plan needs to be worked out to ensure miners recover from the big slump.
Last year, gold export receipts, slumped 28% to US$946m in 2019 from US$1,33bn in 2018, leaving the country with no alternatives for foreign currency as the second highest forex earner tobacco also tumbled 7% to US$846.7m from US$907.8m due to prolonged droughts and unfavourable payment policies.
Since 2017, the country has been grappling with foreign currency shortages, inefficient mining and processing technologies.
The reduction of the forex retention levels by the Reserve Bank of Zimbabwe is believed to have impacted negatively on the deliveries.
This has created arbitrage opportunities for miners to smuggle gold outside the country’s borders.
Over 34 tonnes are believed to have been smuggled out of Zimbabwe.
Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said: “As long as the government continues to delay in payments of gold deliveries, exports will not improve as miners will look for alternative markets.
Given the effects of Covid-19 to the sector, the central bank would have come up with more incentives to boost the sector.”
Experts say established mining companies with huge capital have dominated this year’s deliveries due to lack of movement from the small scale miners.
Zimbabwe is targeting 100 tonnes of gold per year by 2023, a figure which is expected to help the sector to earn US$12bn yearly and only if forex retention threshold, fundamentals and funding issues are addressed. Gold is expected to lead the charge with US$4bn.